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Modern-day slavery generates billions: UN report

Twelve-year-old prostitute Mukti applies makeup before serving a customer inside her small room at a brothel in Faridpur, located in central Bangladesh February 22, 2012. UN agency finds more than 20 million people classified as exploited are generating $150.2-billion in profit each year.

Andrew Biraj/Reuters

More than 20 million people worldwide are working as modern-day slaves and generating billions of dollars worth of illegal profits annually, new research shows.

Forced labour and sexual exploitation generate $150.2-billion (U.S.) in profit each year, according to an economic impact report by the International Labour Organization (ILO), an agency of the United Nations. (See chart, below.) That is three-times higher than previous estimates.

The study is based on the approximately 21 million people the ILO classified as exploited as of 2012. If these often unseen employees were a company, their annual profit would be comparable to the yearly revenue of General Motors Co. The ILO defines forced labour as men, women and children working involuntarily by fraud, deception or force. These workers typically face some kind of penalty or threat and they don't necessarily include workers who earn very low wages.

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"The continued existence of forced labour is bad for its victims, for business and for development," said Guy Ryder, director-general of the ILO, in a statement. "It's time that we act together, to eradicate this hugely profitable, but fundamentally evil source of shame once and for all."

The profits from sexual exploitation are six times greater than those from all other labour exploitation, with low operating costs and high prices paid by clients. The sector accounts for around $99-billion in global profits annually, according to the ILO. That's nearly double the amount generated by forced labour exploitation, which tallies domestic work, agriculture and other industries. The ILO found that construction, manufacturing, mining and utilities account for $34-billion of the overall profit figure. Agriculture added another $9-billion, and $8-billion came from unpaid or underpaid domestic workers in homes.

Over all, more than half of the victims of slavery are female while children under the age of 18 account for one-quarter, according to the ILO's estimates.

The Asia-Pacific region derives the greatest profits from forced labour by geography at $51.8-billion, as it includes the greatest number of victims. The developed economies, including the European Union, make the most money on a per-victim basis at an average of $34,800.

The vast majority of forced labourers are "exploited in the private economy, by individuals or enterprises" according to the report. The analysis doesn't take into account state-imposed forced labour because profits derived from activities such as recruiting child soldiers was too difficult to calculate.

But the ILO report said state-imposed forced labour is becoming less important when matched with the impact of forced labour in business. "Attention must now be focused on understanding what continues to drive forced labour and trafficking in the private sector," the report said.

As global supply chains grow more interconnected, more companies are at risk of coming into contact with modern slavery, according to Andrew Wallis, head of Unseen, a British-based slavery eradication and prevention group. This presents real risk to company brands particularly in the age of social media.

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"If modern slavery and trafficking are found within [a company's] supply chains, that is brand risk," Mr. Wallis said. "And that begins to flow into issues with staff retention, recruiting the best and brightest and perception in the marketplace."

Many companies are becoming more sensitive to how their global supply chains are perceived. One recent example is Tata Global Beverages Ltd., makers of Tetley Tea, which recently hired an independent company to audit the living and working conditions of APPL (Amalgamated Plantations Private Limited) tea plantations. Tata holds a minority stake in this India-based business.

APPL landed in hot water recently after a report in a British newspaper questioned whether the company encouraged slave traders to target young girls on the plantation. Tata responded saying it checked with APPL for confirmation that it treated its employees fairly, and said it is "committed to the fair and ethical treatment of people across our supply chain."

The ILO called on governments to strengthen laws and improve enforcement. It also said it would work with global businesses to crack down on forced labour in their supply chains, and it touted the importance trade unions can have in empowering at-risk employees.

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About the Author
Financial Services Reporter

Jacqueline Nelson is a financial services reporter at the Report on Business. Prior to that she was a staff writer at Canadian Business magazine, covering news and writing features on a wide variety of subjects. More

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